Week of September 14, 2008

Financial market conditions have now descended to the lowest point since the banking shutdown of 1932. In one 96-hour period, we saw three nearly unimaginable events. Lehman Brothers, America’s fourth-largest securities firm, filed for bankruptcy. Merrill Lynch, the best-known firm, was forced overnight to sell itself to Bank of America. And market pressures forced the Federal Reserve into a huge $85bn takeover of AIG, our largest insurer, to avert its bankruptcy.

All of this occurred only two weeks after the massive federal rescue of Fannie Mae and Freddie Mac and three months after the collapse of Bear Stearns. Market participants around the world have been shocked senseless by these serial failures. Their confidence has evaporated, replaced by an unprecedented level of fear. That is why lending is frozen and worldwide markets are plunging.

Now, everyone has the same question: how much worse can this get? This lack of confidence is self-fulfilling and endangers other financial institutions. These are companies that refinance themselves in the capital markets every day. They depend on the confidence of lenders. But, if that disappears, their solvency is threatened. This is where we are now.

It can be useful to look at what happened to he succession of power once ancient Rome made the transition from republic to empire under Julius Caesar. I think of it as the Tiberius Gambit. Each emperor did his best to ensure that the one who followed him could never rival his achievements. And it was a short step indeed for Tiberius to inflict he egregious Caligula on the empire, secure in the knowledge that he would make the populace yearn for the comparatively golden days of his own rule. So Augustus gave us Tiberius, Tiberius gave us Caligula and the accidental Claudius gave us Nero. Nero almost destroyed the Roman economy by his personal greed and burned part of Rome intending, perhaps, to remove the blight of a quarter congested with the urban poor. When it got way out of hand and he began to feel universal public opprobrium, he blamed it on a fringe group of alien terrorists, the early Christians.

So Bush would give us McCain and McCain would give us Palin and Palin will ignite the fire and fiddle while the planet burns. The joke is on us. Hail!

I actually never thought there was a Bush doctrine. Indeed, I believe the assertion that there is such a doctrine lends greater coherence to the administration's policies than they deserve.

It seems like the English language isn't big enough to contain the lies of John McCain. McCain has now launched a Spanish language in which he blames Barack Obama for torpedoing comprehensive immigration reform -- even though they were both on the same side.

“The Achilles’ heel of record-keeping is people,” said Jason R. Baron, the director of litigation at the National Archives. “We used to have secretaries. Now each of us with a desktop computer is his or her own record-keeper. That creates some very difficult problems.”